Stimulus boosted jobs by 1 million - White House

By Tami Luhby, senior writer

NEW YORK ( -- The nation's economy started to turn around after the passage of President Obama's $787 billion stimulus package in February, his chief economic adviser said Thursday.

The American Recovery and Reinvestment Act created or saved slightly more than 1 million jobs through August, according to the president's Council of Economic Advisers.

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The stimulus plan also boosted the nation's gross domestic product by 2.3 percentage points in the second quarter, the council said in its first quarterly stimulus report to Congress.

"We have absolutely seen a change in trajectory," said Christina Romer, the council's chairwoman. "An economy that was in free fall with a tremendous amount of downward momentum has certainly seen something very different."

Not everyone, however, is buying that stimulus is helping improve the country's fiscal picture.

"The White House can concoct whatever number they want, but the reality is 3 million American jobs have been lost since the start of the year and the unemployment number continues to rise," said Dave Camp, R-Mich., top Republican on the House Ways and Means Committee.

Stimulus on the streets

The federal government distributed $151.4 billion in stimulus funds or tax relief by the end of August. Another $128.2 billion was made available for recipients to claim. Much of the money spent went to individual tax cuts, state fiscal relief and aid to the most vulnerable.

Economists have differed over whether the stimulus package indeed improved economic activity in the second quarter, though most say it will have an impact in the current period. The GDP contracted at an annual rate of 1% in the second quarter, a significantly slower decline than in the previous two periods.

The latest Blue Chip consensus economic forecast for the third quarter is a 3% expansion, Romer said. Stimulus spending accounts for 2.7% of that bump.

The unemployment rate, however, remains a weak point in the Obama administration's portrayal of stimulus gains. The rate continues to increase, rising to 9.7% in August, though the pace of job loss has moderated. Congressional Republicans are pointing to the rising rate as evidence that the stimulus package is a failure.

"The Democrats' bloated 'stimulus' isn't working, and we can't afford another trillion-dollar mistake on the backs of our children and small businesses," said Rep. John Boehner, R-Ohio, after the latest job figures were released Friday.

The return to job growth depends on private industry, said Romer, adding the recovery act is still on track to save or create 3.5 million jobs.

"One of the big issues is, does the private sector come back?" Romer said.

So far, stimulus funding has helped boost employment in manufacturing, construction, retail trade and temporary employment services, the council said.

The administration has been on the defensive lately when it comes to the recovery act. Last week, Vice President Joe Biden gave a lengthy speech detailing how the stimulus package is meeting its goals to pull the country out of its economic doldrums.

"Two hundred days in, the recovery act is doing more, faster and more efficiently and more effectively than most people expected," Biden said.

Still, even some of the president's supporters say more needs to be done to help Americans during the recession.

Sen. Joe Lieberman, I-Conn., called on the administration on Wednesday to speed up the pace of stimulus spending, particularly on construction jobs.

"We must do everything possible to put those and all stimulus dollars to work as quickly as possible to blunt the heavy toll the recession continues to take on far too many of our citizens," Lieberman said. To top of page

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